Corporate tax dodging costs lives, awards ceremony shows

Corporate tax dodging costs lives, awards ceremony shows

By staff writers

21 May 2009

The UK-based global development agency Christian Aid is today revealing the winners of its new 'Alternative Tax Awards' for companies which have shown ingenuity in reducing their tax commitment - at great cost to people, planet and the poor.

Categories for the awards include Tax Haven Enthusiast of the Year, Low Tax Rate Achievement and Most Surprising Use of Tax Havens.

The Alternative Tax Awards take place on Thursday 21 May at a ceremony in central London, coinciding with accountants’ own Taxation Awards at the Hilton Hotel on Park Lane.

Christian Aid has created the Alternative Tax Awards to draw attention to the devastating effect corporate tax dodging has on poor countries.

"This is one-and-a-half times the total annual amount of aid that poor countries receive and is desperately needed to fund public services such as hospitals and schools," she explains. "We estimate that if the money was used according to current spending patterns, then the lives of some 350,000 children under five would be saved each year."

"Much of the money that goes missing ends up in tax havens. The accounting rules must be reformed to prevent this happening. Tax dodging costs lives," says Cavanagh.

Christian Aid is holding its Alternative Tax Awards ceremony outside the Hilton Hotel on Park Lane at 7.45pm this evening. The winners are being invited to collect their trophies from the respected churches development agency.

The victors are as follows:

Greatest Potential for Tax Reform:

The joint winners are the Big Four accountancy firms - PriceWaterhouse Coopers, KPMG, Ernst & Young and Deloitte & Touche - together with the International Accounting Standards Board. These five organisations have between them the power to change the rules to help developing countries obtain the money which is rightfully theirs.

Most Surprising Use of Tax Havens:

The joint winners of this award are CDC Group plc and its sole owner, the UK Government’s Department for International Development (DFID). CDC told MPs in December 2008 that it has 72 subsidiaries, of which 40 are in tax havens, including Bermuda, Mauritius and the Netherlands Antilles.

DFID argues that if CDC did not use tax havens, then investors in the funds used by CDC would be taxed twice. Christian Aid nonetheless finds it astonishing that the government department set up to tackle international poverty allows its own company to exploit tax havens as a means of avoiding tax in developing countries.

Low Tax Rate Achievement Award:

P&O cruises’ owner Carnival deserves a special mention for its outstanding, dedicated and entirely legal use of tax avoidance. Between 2002 and 2008 inclusive, Carnival plc paid tax of just $61.7 million on total profits of $4.3 billion. This is an effective tax-paid rate, over the seven years, of approximately 1.4 per cent.

Tax Haven Enthusiast of the Year:

The winner of this award is Barclays plc. The financial services company is extremely keen on tax havens – with subsidiaries in some 315 of them. Again, this is entirely legal.

Most Overhyped Reform of the International Tax System:

Bilateral Tax Information Exchange Treaties (TIEAs) are the clear winner of this award. The Organisation for Economic Co-Operation and Development says TIEAs are an important weapon against tax dodging. They are voluntary instruments, however, which offer little or nothing to developing countries.